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The Les Kilpatrick. Students to Start-ups. Entrepreneurial Skills Workshop Series. Chance, Choice, Change and Challenge* 5 “at-bats” Combination of base hits, strike-outs and homeruns Change = demographics Chance = personalities, priorities and interests

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slide1

The Les Kilpatrick

Students to Start-ups

Entrepreneurial Skills Workshop Series

what animates your career
Chance, Choice, Change and Challenge*

5 “at-bats”

Combination of base hits, strike-outs and homeruns

Change = demographics

Chance = personalities, priorities and interests

Choice = personal goals and ambition

Challenge = how to bring it all together

How best to maximize your opportunity?

What Animates Your Career?

*Jonas Salk, Man Unfolding, 1972

why this series
Why this Series?

Entrepreneurship is about making an impact

An acquisition might be your career highlight

Leveraging Orange County’s natural strengths

Total estimated employment: 29,000

Total estimated wages and salaries paid: $2.2 billion

Average wage: Nearly $76,800

Percentage of total California

biomedical workforce: 11%

Statewide ranking: Third

slide5

Medical Devices M&A

2006 150 Deals $53.3B

2007 191 Deals (+27%) $57.9B (+8.6%)

Aggregate 2007 M&A = 90x Aggregate 2007 IPOs

Source: Levin AssociatesHealthcare M&A Information Service, January 2008

your game plan for success
Your Game Plan for Success

February 17, 2009

How to Prepare Your Medical Device Company for Acquisition: an Overview

February 24, 2009

Envisioning Milestones and Achieving Them

March 3, 2009

The Art of Valuation

March 10, 2009

What Makes a Great Investor Pitch

April 8, 2009*

Secrets to Presenting a Winning Investment Pitch

May 5, 2009

Midcourse Corrections

May 12, 2009

Executing the Exit

our speakers tonight
Our Speakers Tonight

Ray Cohen, CEO,Symphony Medical & Fjord Ventures

Greg Ruehle, CEO of Orange Coast Medical Ventures

slide11
Flaming enthusiasm, backed up by horse sense and persistence, is the quality that most frequently makes for success. – Dale Carnegie

Reasonable men adapt to the world around them; unreasonable men make the world adapt to them. The world is changed by unreasonable men. – Edwin Louis Cole

how to prepare your medical device company for acquisition
How to Prepare Your Medical Device Company for Acquisition

Is it really a well understood business methodology?

The secret is………positioning for sale requires the same basic effort and elements

Financial Buyers vs Strategic Buyers

Strategic buyers acquire either (i) fully baked businesses that are accretive or (ii) technology that fits with their product portfolio

What is most important to strategic buyers? – “proof”

Revenue is not a necessary element

You and your people are probably redundant

elements of a successful medtech start up company
Elements of a Successful Medtech Start-Up Company

A highly motivated, effective and dynamic leader(s) that understands the concept of “enrollment”

Novel concept or technology

Experienced advisors from specific field of endeavor

Physicians, Researchers, Executives with start up experience, Regulatory expertise

Large under-served market and detailed market research & analysis

How big is the market? what is indication for use? competition? Incremental product improvements create products not companies - there is a distinction btwn a “technology platform” and a “Product”

Intellectual property protection

Initial landscape analysis, filing provisional patents, enablement of invention

A well conceived FDA regulatory strategy - 510(k)?, PMA?, Clinical Studies?

Pre-clinical safety & efficacy data (bench data if device)

A concise and easy to understand PowerPoint presentation

No one reads business plans!, 5 yr projections are useless

investment capital
Investment Capital

Yes, you need it. Capital is the life blood of early stage and growth companies

Rule – Things always take longer and cost more than you think

Sources of Investment Capital

Friends & Family, high net worth individuals

Incubators - The new concept for start ups

Professional “Angel” investors

Venture Capital

Not all VCs are created equal

How do you get an introduction?

The dilution dilemma

They don’t teach you in B-School is how 100% can turn into 1%

Preferred Shares, Common Shares, Stock Options

growth phase positioning the company
Growth Phase - Positioning the Company

Enroll the right people

Be lean, fast and capital efficient

Good science is critical – don’t take shortcuts

Focus on establishing proof that the product works

Focus on filing patents

Understand how and by whom similar products are sold to end users

Most early stage companies only prove that adoption is hard and devalue opportunity.

Hence, what are you alternatives?

Consider an early sale of the Company!!!!

Consider a strategic partner to take product to market

Consider distributors (US vs Intl)

Consider direct sales to a limited market or geography

If you plan on taking product to market, Revenue is the key value creator. Profit is not

critical exit elements
Critical Exit Elements

Size of market must be clear

Marketing survey of likely end users

Proof of safety and efficacy

Third party validation by key opinion leaders

Intellectual property is protected

issued patents are much more valuable than pending patents. If you have to buy someone’s issued patent that’s better than dancing around it

Bill of materials must be well understood

Gross margin of product will drive the exit price

overview

Overview

Orange Coast Medical Ventures

Overview

Orange Coast Medical Ventures

orange coast medical ventures overview
Orange Coast Medical Ventures Overview

OCMV was the first incubator to be facilitated by OCBIN*, a public benefit initiative of the University of California at Irvine.

OCMV was established to commercialize the inventions of the faculty and researchers of UCI's Medical School and the Southern California Medical Community.

Orange Coast Medical Ventures

* Orange County Business Incubation Network www.ocbin.org

board of advisors
Board of Advisors

Greg Ruehle CEO – Orange Coast Medical Ventures

Paul DeRidder, M.D. Tech Coast Angels

Shiv Grewal Partner - Stradling, Yocca, Carlson & Rauth

Jim Armstrong Managing Director, Clearstone Venture Partners

Steve Wilson Finance

James Hill, M.D. J.D. Partner – McDermott Will & Emery LLP

Doug Bennett Oversight Committee Chair

Orange Coast Medical Ventures

media coverage
Media Coverage

Getting Ready to LaunchThe Orange County RegisterMay 10, 2007

The New Device IncubatorsStart-Up MagazineJune, 2007

Incubator InnovatorsThe Frank Peters ShowOct. 1, 2007

Orange Coast Medical Ventures

about uc irvine and uci medical center

About UC Irvine and UCI Medical Center

Orange Coast Medical Ventures

uc irvine facts figures
UC Irvine Facts & Figures

U.S. News and World Report: 13th Best Public University in U.S.

4 Nobel Laureates

$3.6 Billion Annual Economic Impact on OC

27,000 Students

1,900 Faculty

8,800 Staff

Founded in 1965

Orange Coast Medical Ventures

uci invention productivity
UCI Invention Productivity

Orange Coast Medical Ventures

the ocmv ecosystem

The OCMV Ecosystem

Orange Coast Medical Ventures

the ocmv ecosystem1
The OCMV Ecosystem

Investors

U.C.

Irvine

Corporate

Partners

OCMV

PortfolioCompany

Mentors

Economic

Development

Service

Providers

Orange Coast Medical Ventures

corporate partner program
Corporate Partner Program

Participate in OCMV ecosystem

Benefits from relationships with all constituencies

Interact with UCI faculty & researchers

Orange Coast Medical Ventures

preferred provider program
Preferred Provider Program

Preferred provider to portfolio companies

Limited # of preferred providers per category

Participate in OCMV ecosystem

Gain leads from other OCMV participants

Orange Coast Medical Ventures

mentor program
Mentor Program

Consists of Experienced Executives

Investors

Service Providers

Corporate Partners

Individuals

Pro Bono Guidance During Incubation

Potential for Employment or Contracts

Orange Coast Medical Ventures

paths to commercialization
Paths to Commercialization

Orange Coast Medical Ventures

investing in ocmv

Investing In OCMV

Orange Coast Medical Ventures

investment overview
Investment Overview

OCMV is a Limited Partnership

Invests in UCI and community inventions

Investors Own shares in OCMV’s LP

Fund life: 3 years

Share price: $125K

Variable discount for founding partners

Participation in OCMV ecosystem

Orange Coast Medical Ventures

investment allocation and return
Investment Allocation and Return

Series A, B…

Investors

Investment

OCMV L.P.

Seed Capital

Portfolio

Companies

Returns

Returns

License and

ContractFees

License and

ContractFees

Salary

Returns

Government

Agencies

U.C. Irvine

Salary

Inventors

Grants

Grants

Grants

Grants

Grants

Grants

Grants

Inventors Shareof License Fees

Inventors Shareof License Fees

Inventors Shareof License Fees

Inventors Shareof License Fees

Inventors Shareof License Fees

Inventors Shareof License Fees

Inventors Shareof License Fees

Inventors Shareof License Fees

Inventors Shareof License Fees

Corporate

Partners

Normal Flow

Optional Flow

Orange Coast Medical Ventures

two portfolio models
Two Portfolio Models

Virtual Company

No payroll

Possible equity for contractors

No office/lab needs

IT equipment & hosting

Primary expense is T&E

Transactional legal expenses

Marketing expenses

Budget up to $10K/quarter

Traditional Company

2-3 paid staff

May be directed research grant

May need offices/lab space

IT equipment and hosting

T&E

Transactional legal expenses

Marketing expenses

Budget up to $75K/quarter

Orange Coast Medical Ventures

vetting process
Vetting Process

Admission Criteria

Intellectual property

Market size and growth rate

Scalability of company and technology

Sustainability

Key individuals - experience and skills

Evaluation Process

Committee member becomes sponsor

Sponsor works with company to create pitch

Pitch delivered to full committee

Committee accepts, rejects or defers

Orange Coast Medical Ventures

slide37

Greg Ruehle, CEO

c/o Office of Technology Alliances

380 University Tower

University of California, Irvine

Irvine, CA. 92697-7700

Office: 949-824-7295

Cell: 949-212-1983

Fax: 949-824-2899

E-mail: G355@aol.com

Orange Coast Medical Ventures